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Howards Storage World names new owners

HSW - Store 11Re-establishing deteriorated franchisee and supplier relationships plus removing barriers to communication with head office will characterise Howards Storage World’s new management style.

The new owners of the specialty retailer have now been confirmed as UAE based dual companies My Home Storage and Store Trade.

Enayat Ghiasi, CEO of My Home Storage and Store Trade, has purchased the assets, brand name and ongoing Howards Storage World business.

As a result of restructuring leading up to the sale and Ghiasi’s acquisition of the business, over 160 jobs have been retained and 46 of the original 58 HSW stores will continue to trade.

Speaking to Inside Retail, Ron Pugsley, newly appointed chief operating officer of HSW and a franchise owner for seven years, said a major feature of the company’s restructuring after entering administration was centred on negotiating better deals with property landlords. Pugsley said the new management team has come to “satisfactory arrangements” and struck deals that allow a number of its franchisees to remain as viable entrants in the market place.

“We’ve been able to strike good deals and where we haven’t, we’ve been able to close underperforming stores and we will strengthen our entire business in doing so – those underperforming stores were a drain on cash flow for the business and now we’re no longer saddled with those.”

Pugsley said the new management has come to a great understanding with landlords and maintained its network presence because property firm’s “know the value Howards brings to a shopping centre.”

Immediate plans are to bring the business back to growth in sales and profits, achieved through through a re-engineering of the company’s operations.

“We are actually going back to a model that was very successful for the business up until 2012,” said Pugsley.

A major issue underpinning the company’s slip into administration involved moving away from the original business model and sourcing product from overseas. Previously, HSW had “relied heavily” on local suppliers to source products and were able to have new merchandise presented first-hand, with “some of the great ideas and those that we thought were unique to the Howards offering”, and in the “right instances” gave them proprietary arrangements resulting in having the products exclusively.

With head office beginning to source products itself, Pugsley said this wasn’t cost competitive and added complexity to the businesses overheads.

“So we’re going back to the future , we will revert to strong local suppliers and be heavily reliant on those and we’ve already started speaking to those local suppliers and they are extremely pleased that this decision is being made.”

Pugsley said franchisees are also happy and that streamlining the company’s operations will translate to significant benefit for the customer. After moving away from the company’s heritage and value proposition, the focus is on coming back to its roots.

“I’ve been a franchisee for seven years now we’ve had tremendous growth in the first couple of years year after year, until this year and I think we started to erode the value proposition that we were presenting to our customer,” he said.

“We started to buy poorly started to offer not the right mix of products and there was a more significant price gap than we would like – we’re going to address all of those.”

Don’t expect to see outlandish new store formats with the new management team at the helm. The new strategy is centred on getting back to basics. Ten stores have been closed after being deemed “nigh on impossible” to make profitable again, and the focus is now on strengthening franchisee relationships.

“It is a franchise model that we want to run, because the most profitable stores are run by franchisees,” said Pugsley. “They put their heart and soul into everything.”

“It’s getting back to a successful business model that our consumers love it – the personalised service they get. Suppliers love servicing us because we offer a unique positioning in the marketplace and they can bring new and exciting products for us.”

According to Pugsley, the relationship between the former owners and franchisees had deteriorated, with “silos built and barriers to communication”, with more of a focus on wanting to run company stores at the expense of franchisees.

Ghiasi, originally from Iran before relocating to Dubai where he built a retail business that consists of 85 retail outlets, primarily in fashion, has been living in Australia for a number of years,

“So financial backing out of Dubai but Enayat is based in Australia and will have a very hands on role within the business as chief executive officer,” said Pugsley, who has a background in corporate senior management roles with Coca Cola Amatil and Cadbury Schweppes.

“I’m already impressed with the work that he’s done in negotiating with the leasers, the shopping centre owners and the forthright manner in which he’s spoken to them but also the relationship he’s established already with those operators.”

“We want to build a much more collaborative environment in the whole business and I just want to lead by example and that’s the way its going to operate moving forward.”

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